Saudi hospitality sector worth over USD 18 billion by 2016

A rise in the number of pilgrims visiting the Kingdom for Hajj and Umrah, are boosting domestic tourism growth, with Saudi residents making 22.5 million overnight trips per annum.

Tourism receipts for Hajj and Umrah currently account for around 3% of GDP and, according to tourism officials, the country gained a reported US$16.5 billion from tourism in 2012, representing a 10% increase on the previous year.

The largest hospitality market in the GCC, Saudi Arabia also accounts for the bulk of international tourist arrivals, at 46% according to an October 2012 GCC Hospitality Industry Report from Alpen Capital, representing a 50% year-on-year increase against 2011 figures.

“The Kingdom is investing heavily in it’s infrastructure as expansion plans for the new US$7 billion Jeddah airport project move ahead, with the airport projecting annual passenger volume of up to 80 million passengers within the next two decades,” said Mark Walsh, Portfolio Director, Reed Travel Exhibitions, organiser of Arabian Travel Market .

The Red Sea port of Jeddah is the gateway to Makkah and Medina, a favoured destination for domestic tourism in the summer, as well as a commercial trading hub for the west coast of Saudi Arabia.

In addition, Riyadh the capital city and seat of the government, is also experiencing increased demand from business travelers.

Saudi government investment into key infrastructure projects including airport expansion, railways and roads, is pegged at around US$80 billion between now and 2022, with investment into major tourism initiatives forecast to grow at a CAGR of 6.9%.

According to the Alpen report, tourist arrivals are expected to grow at a CAGR of 4.0% between 2012 and 2022, driven by strong growth across all sectors, with occupancies set to jump from 67.5% in 2011 to 74.2% by 2016 and a US$30 increases in ADR to US$258.4.

“In tandem demand for hotel rooms means that aggressive development and expansion plans for a number of major international hotel groups is also on the short-term agenda. InterContinental Hotels Group has said that Saudi Arabia is one of the markets representing the most opportunity for its Middle East business to grow in 2013, with two new properties set to open in Riyadh this year, and a total of eight hotels by 2018,” said Walsh.

Hotel room supply in the Kingdom is expected to increase at a CAGR of 1.5% between 2011 and 2016, increasing from 243,117 rooms in 2011 to 262,049 in 2016, with 69 properties currently in the planning or construction phase.

“The tourism sector is now the country’s second largest industry, with around 8% of total jobs, and industry growth presents a huge opportunity for job creation in the local market, with Takamul [an SCTA affiliate] organising a number of job fairs around the country and working hand in hand with tourism companies to attract young Saudis looking to embark on a career in hospitality,” added Walsh.

Held under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, Ruler of Dubai and set to celebrate its 20th anniversary, the show has grown to become the largest showcase of its kind in the region and one of the biggest in the world.

Held under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, Ruler of Dubai and set to celebrate its 20th anniversary, the show has grown to become the largest showcase of its kind in the region and one of the biggest in the world.

New to the 2013 event, ATM is launching the Digital and Technology Day focusing on online travel developments and showcasing headline speakers from across the industry.

Taking place again this year is the New Frontiers Award, which was created to recognise outstanding contributions to tourism development in the face of overwhelming adversity.

Industry Careers Day will wrap up the week providing the opportunity for visitors looking to make a career move to meet with the exhibitors’ HR contacts looking for their next recruit.

Özgür Töre is the founder and managing editor of award-winning travel news website; Focus on Travel News – ftnNEWS.com and Arab Turkish Travel Gazette – www.arabturkishtravel.com. Mr. Töre is the co-founder of RusTourismNews.com and UkraineTravelNews.com
Mr. Töre is a board member of Association of Tourism Writers and Journalists (TUYED) in Turkey and International Tourism Writers Alliance.
He holds a Master’s Degree in Project Management from Istanbul Kültür University and a Bachelor’s Degree in Business Administration from the Istanbul Bilgi University.